The Nature And Problems Of Economic Developmnet in China (Essay Sample)

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China’s Economic Growth and Development
Just before the 1950s, China was among the extremely backward countries economically. Today, the country stands among the world’s greatest economic powers. It is currently the world’s second biggest economy, despite the many challenges that the country has had to endure on its way to where it is today. The living standards of the country's citizens have also significantly improved, making the country be rated among the prosperous societies. After the opening up of the economy to international trade in the late 1970's, the growth rate accelerated at an unprecedented rate, and the momentum found its way into the 21st century. In 2004 when the government strengthened its macro control on the economy, China entered a period of steady development, and this will continue for many years to come. The gross domestic product for that year rose by 9.5 percent from the previous year, amounting to over 13 billion Yuan.
China’s Strategy for Economic Development
During its ninth Five-Year plan of 1996 to 2000, China adopted a strategy for economic development, which was the most successful. It is during the implementation of this plan that the country worked towards realizing its targets. The country worked towards sustaining rapid growth, improving the quality of the economic growth and its benefits and laying a firm foundation for doubling the current GDP by the year 2010. To achieve this objective, China had to create a substantially perfect market economy for the socialists and put down state-owned enterprises. The strategy would play a great role in allowing for more significant contribution in international competition and collaboration. The country also had a target of making the GDP reach more than 12,500 billion Yuan and 9,400 Yuan per capita by the year 2005. This would be achieved on the assumption that the economic growth would be around 7 % per annum. In so doing, the tangible results would be improved quality of life, more than 5 percent annual growth in the disposable earnings of those living in the urban areas, and in the net income of residents in the countryside. In so doing, the country would be able to reduce the number of registered by at unemployed urban dwellers by at least 5 percent and by so doing maintain stable prices by striking a balance between international expenditure and revenue (Faure 26).
The five-year strategic plan also had the objective of upgrading and optimizing the industrial structure. This way, the competitive edge would be sharpened, and by 2005, the added value of the industries at the tertiary, secondary and primary levels would account for 36, 51, and 13 percent respectively. In matters of increasing the employment levels, these industries would account for 33, 23, and 44 percent of the employed labor force. Further, developing these industries had an impact on improving infrastructure, decreasing the widening economic disparity between regions, and increasing urbanization. Research shows that the country achieved most of these targets ahead of the scheduled time frame.
Macroeconomic Indicators for China
Since the year 1978 when the state started the market-based reforms for its economy, it has consistently achieved a growth rate of approximately 9 percent per annum. The rapid, yet sustained growth rate has seen over seven million people come out of extreme poverty and live sustainable lives. The economy had also stabilized because the country has been able to realize all of their millennium development goals. Due to this fact, the economy is steadily slowing down, with a target growth rate being set at 7 percent. This is a rate that the country feels that it will continue to develop, and at the same time not plunge back into the situation it was in before the economic revolution. At this rate of growth and development, the country projects that it will still complete those goals that are still underway, and others that it will continue to set for its Five-Year Strategic plans in the future. The foundations for the growth and development of China’s economy were mostly exports and capital investment, but currently, the country needs not rely on the two factors, as it has reached a very crucial point in the economy. Currently, what the country needs is to re-balance the economy and this can be achieved by taking several factors into consideration. Firstly, it needs to reduce its reliance on exports of low and medium quality. China should consider moving higher up the value chain, to produce goods that are based on high-technological expert and knowledge (Faure 28).
Rebalancing the economy also entails encouraging more growth from local consumption of the goods and services they produce as opposed to exporting them. In so doing, China will also reduce the number of imports coming into the country and the amount of expenditure on foreign countries. Sustainability objectives are now an essential component of their growth strategy. By addressing the pressures associated with inequalities in wealth and income, the country can be able to create sustainable sources of income for its citizens. One of the ways in which to achieve sustainability is the innovation of low carbon, which can provide the citizens with a new source of external demand. Creating opportunities for exports and licensing the use of technology in green industries will go a long way in stabilizing the economy. Although China is a communist nation, it is increasingly becoming tolerant to an open economy, and this can be explained by the GDP which is mostly enhanced by the free trade policy, which accounts for more than 70% of the revenue (Faure 28).
China’s economic statistics show that the country’s GDP accounted for 7.1% of the world’s total GDP. Forecasts of the economy showed that by the year 2015 the state would account for 19% of the world's GDP, which is the highest among the countries in the BRIC category. The per capita incomes are now on the rise in China, and this can be attributed to the increased share of the GDP by the Chinese industry. GDP from this sector has remained below 50 percent, despite having grown from 30 percent before the 1980s. The shares from the agricultural sector had significantly decreased from 30% to less than 10% by the year 2009. One reason behind this fall is that the masses have been moving from the rural to the urban areas in search of employment. However, the agricultural sector accounts for about forty percent of the labor force in the country. Currently, China is operating on an Economic Plan that focuses on the development of the services sector, to improve incomes, and increase urbanization (Faure 32).
China’s Development Strategies
For many years, China’s economy has been reliant on exports for its growth, which have accounted for about 40% of the growth. This has been so because the economy has mostly been a combination of a command economy and a market economy. However, the market is gaining momentum over the command economy. As earlier mentioned, investment has been a key driver in the growth and development of the economy of the nation. In comparison to other countries, China was topping the list regarding investment, which was at 46%, compared to Korea's 39% and Japan 36%. Korea, Japan, Switzerland, and Germany have trade surpluses in most of their business transactions with China because of the high-value manufactured items that China needs, especially the ones that go into investment. Innovation is the driving force behind the country’s growth, and its policy on development and economic growth is slowly but steadily changing. Experts say that China is on a path of endogenous growth that is marked by innovation and technology.
Moving Towards 2030
China is currently working on completing its transition to becoming a market economy. This goal is being driven by reforms in the land, financial, entrepreneurial and labor issues. By strengthening the private sector and making it open to competition and innovation, the government has played a role in ensuring that there is equality of opportunity for the players in the economy to drive the economy towards a new level of growth and development. According to a report by the World Bank in 2012, some of the key indicators of economic growth in China include the increasing Foreign Direct Investment.
Economic Growth based on Foreign Direct Investment
Since when China opened up to international trade, she has accumulated foreign-exchange pools that are worth over three trillion dollars. The excesses have helped the economy to boost their outward overseas direct investments, most of which are directed towards Latin American and African developing countries. The investment that China makes in the foreign countries are said to earn the economy interest about a billion dollars on a daily basis. China has become a powerful financial player in most African countries, with most of them acquiring loans from China as opposed to the World Bank. Nigeria and Zambia, for example, borrow over $100 million every year from China, which represents about 1.5% of the GDP (Garnaut, and Ligang 43).
China is expanding its territories, and currently, it is looking into making investments in Eastern and Western Europe. Most of the investments will go into the engineering and technology sectors, as China tries to find new markets and have a greater influence on the global supply chains. Recently in the year 2010, a Chinese manufacturing company known as Geely, purchases a Swedish car manufacturing company known as Volvo. Lenovo, based in China, also bought IBM, the maker of PCs. In addition to the outside investments, China is also doing well in inward foreign direct investment. She aims for forwarding direct investment on her private se...